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An article in The Independent newspaper this week quotes onshore gambling executives that say the government needs to tax offshore companies to make the business fair to all parties involved.
"Right now there is no competitive advantage to being onshore other than, perhaps, securing a better relationship with racing and even that is debatable." Gala Coral CEO Carl Leaver told the paper. He went on to say that onshore taxes are putting his company at a big disadvantage against offshore organizations.
Leaver continued "That seems a topsy turvy situation because offshore creates no employment. We want to see all offshore gaming taxed in the same way and at the same level as onshore. If not, then there is no way we could continue to see ourselves disadvantaged in this way."
Gambling firm Ladbrokes also faces a difficult time with the current rules, as it pays a hefty tax bill to the government. Ladbrokes Corporate Affairs Director Ciaran O'Brien said "We pay more tax than we retain in profit. The Association of British Bookmakers' figure for the industry shows that it paid £1 billion in tax and yet retained just £600 million in profit. We are working harder for the government than we are for ourselves."
"Let's say you set a very high tax rate. How would you enforce it? There will be a lot of people outside the net. The experience of the government here when they extended the gross profits tax at 15% (in 2005) was the death knell for any operators onshore."
The British government is addressing the issue, with MP Matt Hancock introducing a bill that is based on the gambler's location, not the location of the operator. The bill will be read on March 30th, but may face difficult times in getting more time as it falls under the "10 minute bill rule".
Commenting on his bill, MP Hancock said "The Bill (would) bring the main offshore gambling platforms onshore by making it illegal for them to accept bets without paying tax and levy. It will be classified as a bet in the UK if that is where the punter is."
For its part, Bodog seems to think that the UK is the best location for an online gambling company. Bodog CEO Patrik Selin told the Independent that the UK has the best betting tax situation. "All over Europe you are seeing a trend to make taxes on gambling higher," Selin said. "Different countries are doing different things to enforce this. Some are trying to get ISPs (internet service providers) to block gaming, others to get the banks to stop dealing with betting sites."
"The UK has the best tax. The lowest of all in Europe. There are benefits from being onshore too. You are more credible and there are more marketing tools, deals with newspapers, football clubs. It is also easier to employ talent."